Tuesday, June 27, 2017

Newlyweds: Don’t Let Financial Stress Take the Cake

Of all the things to discuss before marriage, finances are the least exciting. Statistically, money is the top reason couples argue and financial arguments are among the top predictors of divorce. So, how can you avoid becoming a statistic? Here are some ideas from the experts:

Talk to Each Other 
A 2013 poll by the National Foundation for Credit Counseling found 68% of engaged couples have negative attitudes about discussing money. To 45%, it’s “necessary but awkward,” and 7% say it’s “likely to lead to a fight.” 5% predict it would call off the wedding. The result? Couples don’t talk finances. A Fidelity survey found that over one-third don’t know their partner’s salary, of which 72% think they communicate “very well” about finances.

It’s not surprising: What’s romantic about debt, budgets or taxes? Nobody can ensure newlywed happiness, but experts agree: Don’t wait. Discuss taxes now. If you’re both employed, the “marriage penalty” may cost you more; consider marrying in January. But if one spouse earns the majority, you’ll enjoy a “marriage bonus” and a December wedding might be wise. Whether you talk money weekly or monthly, agree on a system and stay open to change.

Get Started 
Start easy: “What’s your first money memory?” “How did you spend your allowance?” Then, go further with these questions:
  • “Are you a spender or saver?” – If one saves and one spends, create a budget considering both styles. Studies show that men and women spend differently. Women tackle daily expenses (groceries, utilities, clothes); men make larger purchases (TVs, cars, computers). Amounts might be equal, but perceptions differ. About 36% of partners don’t discuss big purchases; that’s a recipe for disaster. 
  • “Are you in debt?” – Your spouse’s debt doesn’t become yours, but it affects your choices. Heavy credit card debt complicates home buying. Make reducing debt a priority. A TD Ameritrade survey found 38% of partners unaware of the other’s debts. 
  • “What are your financial goals?” “Where do you want to be in five or 20 years?” – Goal-oriented people progress toward savings and investing targets faster. Decide on the targets: buying a home, starting a family, being debt-free. List your goals, then share and plan together. 
Know what’s important to each other: things or experiences? Saving for a house or for retirement? Clarify these values early on in the marriage.

Trust Each Other 
Be honest with your partner. If you made a foolish purchase, own up to it. Some 40% of partners have lied about the price of a purchase. Lying about money has huge repercussions. Support one another; finger-pointing or retreating won’t help. Instead, work together on a plan.

You’re Still Individuals 
Celebrate differences. Your bargain-hunter should do the spending while you invest the savings. Choose a monthly amount each can spend, no questions asked. Money claims the average is $150.

A joint bank account has pros and cons. SmartMoney found 64% of couples put all their money in joint accounts; 14% kept everything separate. Many newlyweds choose both: yours, mine, and ours. Calculate shared living expenses and then contribute your portion of those costs. The key is to take action now to ensure money won’t prevent your wedded bliss.

No comments:

Post a Comment

Community Financial Credit Union, P.O. Box 8050, Plymouth, Michigan 48170-8050;
© Community Financial 2013
Federally insured by NCUA.
Equal Housing Lender
Additional coverage provided by ESI.
Federally insured by NCUA.